Audits in Horizon 2020 · Research and Innovation Audits in Horizon 2020 Fit for Health 2.0...

Research and Innovation

Audits in Horizon 2020

Fit for Health 2.0

Brussels 22/01/2015

European Commission RTD.J.2 Common Audit Service Kai-Young Weißschädel


Agenda

1. Types of Controls according Article 22 MGA

2. The Audit Cycle in Horizon 2020

3. Practical Advice and Hints

2


Agenda




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Types of controls: Article 22 MGA

• Checks

• Reviews

• Audits

• Investigations

• (Special cases)

• Any form of control can include third parties and subcontractors (Article 10-16 MGA)

4


Checks

• Control implementation of the action

• Verify compliance with legal obligations

• Assess deliverables and reports

• By Commission itself or external persons / bodies

• Can relate to any aspect of the grant

• At any moment and no time restrictions

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Reviews

• Mainly concern technical and scientific implementation of the action

• Can include financial and budgetary aspects

• By Commission itself or external experts

• May include on-the-spot visits or review meetings

• Review report and 30 days “contradictory review procedure”

• Up to 2 years after payment of the balance

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Audits

• Mainly concern financial implementation of the action

• Can include technical and other aspects

• By Commission itself or external auditors

• Usually includes on-the-spot visit and desk review

• Audit report and 30 days “contradictory audit procedure”


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Investigations

• By European Anti-Fraud Office (OLAF)

• Discover fraud, corruption or illegal activities

• Usually includes on-the-spot checks and inspections

• At any moment during and after the action

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Special case: ECA

• Checks and audits by the European Court of Auditors (ECA)

• ECA is external auditing body for all European institutions

• Usually includes on-the-spot visit and desk review

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Special case: International Organisations

• Checks, reviews, audits and investigations also apply to international organisations

• By European Commission, European Anti-Fraud Office (OLAF) and European Court of Auditors (ECA)

• Special agreements between the European Union and the international organisation may apply

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Consequences of findings (Article xx MGA)

• Rejection of ineligible costs (42)

• Reduction of the grant (43)

• Recovery of undue amounts (44)

• Administrative and financial penalties (45)

• Suspension of payments (48)

• Suspension of the action implementation (49)

• Termination of the agreement or participation (50)

• “Extension of findings to other grants”

• OLAF findings may lead to criminal prosecution 11


Extension of findings

• Systemic or recurrent errors detected

• Extension of findings to non-audited/reviewed reporting periods of this grant

• Extension to any other H2020 grant of this beneficiary

• Concerns on-going and closed grants


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Agenda




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Certificate on the Financial Statements (CFS)

• First level audit

• Threshold of EUR 325.000 EU contribution

• One certificate submitted at the end of the action (together with the payment request)

• Cost of CFS eligible under the category “Costs for other goods and services”

• Auditor to be selected by beneficiary

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Common Audit Service

• Financial audits (second level audits) for all H2020 actions of:

All Research related Directorate-Generals of the European Commission

Executive Agencies

Joint Undertakings

• Ex-ante assessment for Large Research Infrastructure (LRI) costs

• Certification on Methodology (unit costs for average personnel costs) 15


Audit cycle Audit Strategy & Selection

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Audit Planning & Preparation

Implementation of Audit Results

Reporting & Audit Closure

Examination on site


Audit Strategy & Selection

• Statistical method: Monetary Unit Sampling (MUS)

• Risk based analysis: high amounts, large proportion of subcontracting, new beneficiaries, etc.

• Fraud-risk audits

• Audits of biggest beneficiaries

• Audits on request

• Technical / Scientific audits

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Audit Planning & Preparation

• Concrete selection of actions to be audited

• Initial contact with responsible auditors to agree on dates and logistics for audit visit

• Formal “Letter of announcement” of audit including detailed annex with information and documents to be provided prior and during the on site examination

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Examination on site

19

Opening

meeting

Analysis

of Systems

in place

Test of systems

and substantive

evidence

Closure

meeting

Assessment

after on site

visit

Usually within 4-5 working days (one week) (…)

General infor-

mation on:

• organisation

• projects

• financial

administration

• internal con-

trol systems

Audit agenda

for the week

Collection of information

and audit evidence,

analysis of documents,

interviews with

researchers, project

presentations, physical

inspections, etc.

Discussion

on prelimi-

nary audit

findings and

observations

Indication of

further audit

procedure


Reporting & Audit Closure

• Draft audit report

• Internal quality check

• Contradictory audit procedure: 30 days for beneficiary to send comments and “Letter of representation”

• Final audit report

• Internal committees and final quality check

• Audit closure with formal “Letter of Closure” of audit and indication of further procedures for the implementation of audit results 20


Implementation of Audit Results

• Managed by the operational services in charge of project management

• Normally adjustment of ineligible costs

• Possibility of extension of audit findings to other grants in case of systemic and recurrent errors

• Administrative and financial penalties

• Further financial and legal consequences: reduction of grant, suspension of payments, termination of grant, OLAF investigations, etc.

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Obligations of beneficiaries

• Obligation to keep records and other supporting documentation for 5 years (3 years for low value grants ≤ EUR 60.000) – Article 18 MGA

• Obligation to make available all records and documents during checks, reviews, audits or investigations and to keep them until the end of these procedures

• Original documents or authorised digital copies

• All evidence must be verifiable, auditable and available (no objection of data protection or confidentiality) 22


Agenda




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Practical advice: please avoid errors

• It makes life easier for you.

• It makes life easier for us.

• It avoids unnecessary conflicts so that emphasis can be put on excellent science.

• Read guidance documents carefully (MGA / AMGA)

• Attend seminars, take advice from specialists

• Pass on information to other participants and actively support them in their cost claims

• Have a staff member dedicated to financial issues 24


Some advice from practical experience

• Staff working on the action MUST keep time records

• Check that all third parties and subcontractors have been clearly declared and follow specific rules

• No subcontracting or invoicing between consortium partners or payment for other partner's costs

• Costs declared MUST be actual and real. No planned, budgeted, apportioned, approximated costs allowed (even not if according to budget foreseen in the grant or according to proposal)

• Inform or ask the Commission / project officer in case of questions, changes or problems

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Additional information

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Participant Portal At: http://ec.europa.eu/research/participants/portal/desktop/en/home.html

Horizon 2020 Documents http://ec.europa.eu/research/participants/portal/desktop/en/funding/reference_docs.html

Horizon 2020 On-line Manual http://ec.europa.eu/research/participants/portal/desktop/en/funding/guide.html

Questions? Research Enquiry Service http://ec.europa.eu/research/enquiries

http://ec.europa.eu/research/participants/portal/desktop/en/home.html

http://ec.europa.eu/research/participants/portal/desktop/en/funding/reference_docs.html

http://ec.europa.eu/research/participants/portal/desktop/en/funding/guide.html

http://ec.europa.eu/research/index.cfm?pg=enquiries

Audits in Horizon 2020 · Research and Innovation Audits in Horizon 2020 Fit for Health 2.0...

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